IEA cuts global oil demand forecast for the fourth time in five months

The International Energy Agency (IEA) has cut global oil demand forecast for the fourth time in the last five months.

IEA estimates that global oil demand will be weaker in 2015 than previously anticipated and supply from countries not part of the Organisation of the Petroleum Exporting Countries (OPEC) will be bigger.

The agency said consumption will grow by 230,000 barrels a day less than it estimated last month, while output from non-OPEC countries will grow at a quicker pace than IEA predicted in November.

Explaining its decision, IEA said it had cut projections because the tumbling prices of the commodity are hitting economies of oil-producing nations. A large majority of next year’s reduction is attributable to Russia, where sanctions imposed by the European Union and the US are weighing heavily on growth.

“Some of the places where demand had been growing particularly fast in recent years had been producer countries because record-high prices were a huge stimulus,” Antoine Halff, head of the IEA’s oil industry and markets division, was quoted as saying by Bloomberg.

“Now those countries are affected very adversely.”

The Paris-based adviser warned that, should production increase faster than demand, some of the producing countries could struggle to store oil by the middle of 2015.

According to figures compiled by Bloomberg, Brent crude costs, which dropped 43% this year, are too low for 10 of OPEC’s 12 members to balance their budgets.

IEA slashed estimates for the amount of crude needed in 2015 from OPEC countries by 300,000 barrels a day, adding that the cartel will have to produce an average of 28.9m barrels a day in 2015, about 1.4m less than it pumped in November.

World oil consumption will rise 1% in 2015 to average 93.3m barrels a day, with non-OPEC supply expected to increase by 1.9m barrels a day.